Rutgers' private-public partnership with Robert Wood Johnson Barnabas Health to expand its health education and research gives the university financial stability and boosts its credit profile, but also poses some risks, a top ratings firm said.

And the “successfully completed” merger with the University of Medicine and Dentistry of New Jersey also adds to a stable credit outlook for the university, Moody’s Investors Service stated in its report on Oct. 18.

The university maintained its rating of AA3 with Moody's, which shows stable creditworthiness and low credit risk. In March, the university was given an A+ rating from Standard and Poor's, another ratings firm.

“While Rutgers will experience a higher rate of revenue growth through its partnership with RWJBH, growing healthcare exposure also increases risk,” Moody’s report stated. “Relative to other higher education revenue streams, healthcare has elevated revenue and expense growth rates, both with higher volatility.”

Tiangi Li (in blue) of Highland Park stands as volunteer students help to load his belongings into a cart during the Rutgers Moving In Day at the Rutgers Honors College dormitory in New Brunswick on 08/30/18. Mitsu Yasukawa/Northjersey.com

Anne Zou of Homedale pulls a cart with her belongings as a volunteer student helps her during the Rutgers Moving In Day at the Rutgers Honors College dormitory in New Brunswick on 08/30/18. Mitsu Yasukawa/Northjersey.com

Volunteer student Joany Xue loads a mirror into a cart as she and other students help incoming students during the Rutgers Moving In Day at the Rutgers Honors College dormitory in New Brunswick on 08/30/18. Mitsu Yasukawa/Northjersey.com

Volunteer students including Tamara Allada (foreground) waits in line to get into an elevator during the Rutgers Moving In Day at the Rutgers Honors College dormitory in New Brunswick on 08/30/18. Mitsu Yasukawa/Northjersey.com

Rutgers mascot Scarlet Knight greets volunteer students Jessica Nguyen (L) and Christina Phan (R) as they help an incoming student during the Rutgers Moving In Day at the Rutgers Honors College dormitory in New Brunswick on 08/30/18. Mitsu Yasukawa/Northjersey.com

Mark Ayad of Staten Island talks to Jessica Nguyen (2nd from R), a volunteer student, who is helping him to move into the Rutgers Honors College dormitory during the Rutgers Moving In Day in New Brunswick on 08/30/18. Mitsu Yasukawa/Northjersey.com

Emily Prestby, Student Leader of Honors College, talks to volunteer students during the Rutgers Moving In Day outside of the Rutgers Honors College dormitory in New Brunswick on 08/30/18. Mitsu Yasukawa/Northjersey.com

Volunteer students wait in line with their carts as they are ready to help incoming students during the Rutgers Moving In Day at the Rutgers Honors College dormitory in New Brunswick on 08/30/18. Mitsu Yasukawa/Northjersey.com

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With expanding healthcare systems in New Jersey, New York and Philadelphia, competition in the market will grow and there will be a demand to adjust to maintain credit quality, the firm predicted.

But Rutgers could have an edge with a partner like Barnabas Health, which is one of the state’s largest health systems, with more than $5 billion in annual revenue.

Rutgers University President Robert Barchi said the report confirms the "powerful" benefits and vision of the partnership, which he announced last year.

"Through this partnership, we have formed the largest and most comprehensive academic health system in New Jersey," Barchi said. "Rutgers is well positioned to be a national leader in patient care, health science education and innovation."

As part of the 20-year agreement with the hospital, the university will get $100 million cash in fiscal year 2019 and $50 million annually over a 10-year period for education and research.

“Risk is partially mitigated by the strength of Rutgers' healthcare partner and the partnership agreement, which limits Rutgers' downside,” Moody’s said.

A strong credit rating helps the university ensure it can secure lower interest rates from investors when it floats bonds for capital projects and other borrowing.

The outlook for Rutgers from Wall Street is an improvement since the merger with UMDNJ first began in 2012. Moody's gave the university a negative bond rating in 2013, which was driven by the complex merger of two large corporations, Moody's said at the time.

This time around, with the public-private partnership with Barnabas, the firm said, "strong management and governance" will be key to its success.

"The partnership is well positioned to succeed, with the two partners sharing responsibility for the enterprise's success while acknowledging Rutgers' traditional academic structure and RWJBH's clinical management expertise," Moody's said.